Billing Charge FAQs

Billing Demand Charge

Approximately 1,000 commercial/industrial customers of Snohomish County PUD are charged a demand charge. The demand charge is based on the maximum amount of electricity that is needed for these large customers.

(To view a complete list of all questions and answers, click on the link to the right for a PDF version. Acrobat Reader is required to view the PDF.)

Demand (kW) is the average kilowatt load over a specified interval of time. Because electricity cannot be stored, the cost of serving a customer who runs a 100-hp motor for 1 hour a day is much greater than the cost to serve a customer who operates a 10-hp motor 10 hours a day, even though both consume the same amount of energy (kWh). The 100-hp motor creates a larger demand (kW) and requires larger generating capacity, heavier cables to carry the electrical energy, larger transformers, switches, fuses, and protective apparatus.

Demand charges are customer fees which the utility charges to large electricity users to recover the PUD costs of providing maximum electrical load. The PUD pays demand charges to its largest electricity supplier, the Bonneville Power Administration (BPA). The PUD also must build and maintain equipment and extra capacity to be able to satisfy the customers’ maximum load requirement. The PUD’s charge is for all kilowatts over 100 kW per month for Schedule 20 customers. Please contact your Executive Account Manager for other rate schedules. You'll find our all of our rates listed under "About Us."

Although all new three-phase services greater than 400 amps receive demand meters, not all customers will pay demand charges. Customers only have to pay when the highest average 15-minute demand is greater than 100 kW. For existing customers, the PUD has developed a Commercial Accounts Verification (CAV) program to verify metering accuracy and to identify customers who have the capability to exceed 100 kW demand — which will result in some customers receiving demand meters who haven’t had them previously.

They may. Their bill will include what their highest average 15-minute demand was for the billing cycle, and they will be charged for the kW load over 100 kW. If, however, the highest average 15-minute demand was under 100 kW, they will not be billed a demand charge.

The PUD demand meter registers in 15-minute blocks of time. The billed demand is based on the highest average (not instantaneous) demand for any 15-minute block of time in the billing cycle. The meter is reset each billing cycle once it has been read and recorded.

A demand meter can be thought of as a standard watt-hour meter which has the ability to measure average load over a specific interval of time. The new demand meters are microprocessor-based instead of electromechanical, and just as the cost of computers have dropped, so have the cost of demand meters while accuracy has increased.

Reducing demand charges or “demand leveling” can be as simple as rescheduling the time when equipment is started to avoid simultaneous use during any 15-minute cycle. More sophisticated energy management activities include demand controllers which typically shed discretionary loads (heating, air conditioning, ventilation fans, electric hot water tanks, refrigerators/freezers, and air compressors) for short periods of time. These loads have “flywheel” capacity so they can be interrupted for short periods without affecting people or business operations. One common problem that can occur is short-cycling, which can be destructive to loads like air conditioners and large motors. These types of loads should be assigned minimum on/off times or duty cycles to prevent problems.

Most electric motors usually start over a period of 3 to 10 seconds, using 5 to 7 times the power draw required for normal full load motor operation. As this large power draw or “spike” is averaged over the 15 minute (or 900 seconds) demand period used to assess demand charges, the impact to demand charges is minimal. Note that motors using adjustable speed drives typically use a ramping process so starting current never exceeds the maximum full load running current and cause no additional demand charges due to motor starting. A motor using a reduced current starting device (soft start) will have a reduced starting current compared to a motor without the device. The soft start motor starting current is typically greater than full load running current though the impact to demand charges is minimal.

Billing Power Factor Charges

Approximately 300 commercial/industrial customers of Snohomish County PUD have their demand charge adjusted based on their power factor. Listed below are some common questions and answers to help you understand the power factor demand adjustment.

(To view a complete list of all questions and answers, click on the link to the right for a PDF version. Acrobat Reader is required to view the PDF.)

Power factor is the ratio of working power or energy (kilowatts or kW) to apparent or total power (kilovolt-amperes or kVA) delivered by the PUD. It measures how effectively total delivered power is being used. A high power factor signals effective utilization of electrical power, while a low power factor indicates poor utilization of electrical power. However, this is not to be confused with energy efficiency or conservation which applies only to energy or kW. Improving the efficiency of electrical equipment reduces energy consumption but does not improve the power factor.

The main contributors to low power factor are motors operated at less than full load. This often occurs in cycle processes such as saws, conveyors, compressors, grinders, etc. – where a motor must be sized for the heaviest loads. HVAC fans often have a low power factor due to running at reduced load.

The power factor charge is an adjustment to the demand charge if the customer’s power factor is less than 0.97 or 97%. This fee is charged to large electricity users to recover the PUD costs for maintaining a good power factor on our distribution system. The PUD pays power factor charges to its largest electricity supplier, the Bonneville Power Administration (BPA), if the power it purchases from BPA is below 97% power factor.

As stated in the PUD’s Rate Schedule 82, the power factor is calculated using the total monthly kWh and total monthly kVARh. The demand is increased by one percentage point for each one hundredth (.01) of a unit by which the average power factor is less than 0.97.

One method to improve your power factor is by adding power factor correction capacitors to your plant distribution system.

When apparent power (KVA) is greater than working power (kW), the utility must supply the excess reactive current plus the working current. Power capacitors act as reactive current generators. By providing the reactive current, they reduce the total amount of current your system must draw from the utility.

Another method is to install equipment that has a good power factor rating versus a poor power factor - for example, adding an adjustable speed drive to a lightly or variably loaded induction motor. Whenever specifying new equipment, the power factor of the equipment should be considered. While initial costs might be higher, it is often more economical in the long run to purchase equipment with a higher or better power factor.

A consulting electrical engineer should be able to assist you with your specific application and equipment needs. The consultant can also work with PUD engineers to ensure the solution is the optimal size and location for both of our systems. There are many factors to consider such as NEC & NESC requirements, harmonic interaction and voltage regulation, as well as economics.